B2B Fraud Prevention: Payment Processing For B2B Ecommerce

Payment processing fraud happens across every industry and business type. It doesn’t discriminate based on size or business model.

But fraud in the B2B ecommerce space is something that needs to be taken extremely seriously.

Fraudsters understand that B2Bs operate with high ticket transactions. Instead of stealing one item from multiple online stores, scammers have been fraudulently purchasing hundreds or even thousands of items from a single B2B ecommerce website using stolen credit card information.

Transactions like this can be detrimental for your organization if they get fulfilled and processed. You might be liable for the money, cost of goods sold, and any fees or penalties imposed during the chargeback process. 

As a merchant, how can you stop B2B ecommerce fraud? You’ve come to the right place. Continue below to find out. 

B2B Fraud Statistics: What You Need to Know

Before we dive in, let’s take a look at some of the B2B ecommerce trends and statistics related to fraud. This will help you understand how serious this problem has become.

• 92% of fraudulent online transactions involve credit cards.
• 39% of credit card fraud cases worldwide occur in the United States.
• Card-not-present fraud is 81% more likely than point-of-sale fraud.
• Ecommerce companies lose $3.94 for every $1 associated with a chargeback.
• B2B merchants say 19% of all online purchase inquiries are fraud attempts.
• Payment fraud represents 60% of B2B fraud losses in the last five years.

Your B2B ecommerce shop is susceptible to fraud. Simply wishing and hoping that you won’t be affected by this won’t be enough—you need to take action and implement fraud prevention measures. 

Payment Options For B2B Ecommerce

If you’re allowing business customers to order inventory online and send you a check in the mail, you need to switch your methodology. Here’s another statistic for you; checks are the most common payment fraud method used by scammers.

Instead of checks, you can consider these payment options:

Credit Cards

Credit cards will always be the best way to process B2B transactions in the ecommerce space. But strangely enough, this has historically been an under-utilized payment collections method.

For starters, credit cards and online transactions are synonymous. Don’t over-complicate things. 

Additionally, accepting business credit cards can actually help lower your credit card processing fees. Commercial credit cards offer a higher level of data protection. If you’re set up to accept Level 2 or Level 3 credit card processing, it reduces the chances of fraud. So card networks, issuing banks, and processors pass the savings along to you, the merchant. 

To learn more about these fees, check out our complete guide to B2B payment processing.

ACH Transfers

ACH transfers are a safe and secure way to get paid as well. This is an electronic bank transfer between the customer’s bank and your bank. 

Accepting an ACH transfer can actually be cheaper than a credit card. But with that said, most of your clients will prefer to use a credit card. They’ll get points, rewards, benefits, and better service if there’s a problem. While you can offer ACH transfers as a payment method, I wouldn’t expect most of your clients to use it.

Virtual Cards

Some of your customers may want to use virtual cards to pay for goods. A virtual credit card goes a step further to protect sensitive card data. It works using the process of tokenization. 

Some examples of virtual credit cards include Visa Checkout, Masterpass by Mastercard, Chase Pay, and American Express Checkout. 

How to Prevent Fraud for B2B Ecommerce Transactions

Now let’s take a closer look at stopping B2B ecommerce fraud before it happens. These are the top tips and best practices for preventing ecommerce fraud. 

Leverage Automation

One of the best ways to fight ecommerce fraud is by automating transactions. You could argue that an automated process would actually encourage payment fraud since the fraudster won’t have to deal with any of the scrutiny associated with human interaction. 

However, automation allows you to use robust tools that can detect fraud. 

For example, you can use AVS (address verification services) to prevent fraud. There are tools out there that can detect if a customer is using an open proxy IP address, which is common amongst cybercriminals who want to conceal their identities and locations. 

Here’s a look at some of the most effective fraud tools on the market today:

If you set up tools like this on your B2B ecommerce site, it will help prevent fraud without you having to do too much manual work. 

Identify Red Flags

Most fraudulent transactions have certain factors in common. You should be able to identify a fraudulent transaction if has red flags, such as:

• Mismatched address (billing address vs. shipping address)
• Shipping to high-risk countries like Somalia, Vietnam, Iran, etc.
• Ticket value significantly higher than your average order value
• Volume significantly higher than average order
• Incomplete customer details

Use these red flags to develop a fraud scoring method for your ecommerce website. If just one of these scenarios occurs, it might not be enough to decline a transaction. But if several red flags appear on a single order, there’s a good chance it’s fraud.

Always Practice Fraud Monitoring

Fraud monitoring isn’t really a “set it and forget it” strategy. 

Is it something you need to be concerned about 24/7/365? Not necessarily. If you have the tools and best practices in place, you can sleep easy at night. 

But understand that fraudsters are always evolving and coming up with new ways to scam you. If you haven’t updated your security best practices and fraud prevention techniques in years, it’s probably time for a refresh. 

Final Thoughts

B2B ecommerce fraud is on the rise.

Fraudsters know that businesses in this space sell products in high-volume, which makes them easier targets for a big score. But you can lower your risk of payment processing fraud by following the tips and best practices described in this guide. 

Fraud prevention doesn’t need to be expensive. Contact our team of experts here at Merchant Cost Consulting to find out how you can save money on payment processing.